The Complete Diluted Market Cap Puzzle: Why Are Investors Still Using the FDV Metric to Speculate on Coins

Fully Diluted Valuation (FDV) used to be an important reference for crypto investors to assess project value, but in the new market environment, this metric is losing its significance. This article will use cases like Worldcoin (WLD), Starknet (STRK), and others to reveal the limitations of FDV and highlight new indicators investors should focus on.

WLD’s Fully Diluted Market Cap Was Overestimated? Actual Circulating Supply Is the Key

Two years ago, WLD soared from $2 to $9 in just one week, igniting the AI sector, but the market had huge disagreements over this project’s FDV.

FDV is calculated by multiplying the current token price by the total supply, corresponding to Market Cap (token price times circulating supply). At that time, WLD’s FDV surpassed that of Solana (SOL), BNB, and other top-tier blockchains, even exceeding OpenAI’s market cap. This sparked intense market debate.

But does this number matter? Not entirely. From current data, WLD’s circulating supply accounts for only 27.54% of the total (current circulating 2.75 billion tokens, total supply 10 billion), far below early liquidity levels. The Worldcoin white paper states that at launch, the maximum circulating supply was 143 million tokens, with 100 million lent to market makers and 43 million distributed to users verified via Orb. Later, market makers returned tokens, and new lending agreements involved only 10 million WLD, making short-term circulating supply extremely limited.

What does this mean? At that time, the real circulating WLD was only 1.33% of the total supply, with most tokens still locked. Therefore, the claim that WLD’s FDV surpassed OpenAI’s was more a reflection of market sentiment around AI than a true valuation of the project.

Now, WLD’s price has fallen back to $0.49, and its FDV is about $4.86 billion. No one compares it to OpenAI anymore. What does this shift indicate? It shows that in conditions of extremely low circulating supply, FDV has completely lost its reference value.

Understanding Supply & Demand and Narrative, the Significance of FDV Is Changing

So, which investors should pay attention to FDV?

For institutional investors or conservative asset managers with long-term holdings, FDV combined with Market Cap is an effective way to monitor project prospects. They need this metric for post-investment management, to judge whether the project valuation deviates excessively from standards. But for short-term retail traders, the key is not FDV but supply-demand dynamics and market narratives.

Why are these two factors more important than FDV? Because the structure of crypto participants has fundamentally changed. In early years, it was mainly ICO participants and retail investors. Now, buyers include multiple rounds of financing, airdrop recipients, market makers, exchanges, and more. Each segment influences the real supply-demand relationship of tokens.

The key is the unlocking schedule. Starknet’s case is very illustrative. StarkWare announced adjustments to early contributor and investor unlock plans, changing from a one-time release of 1.3 billion tokens on April 15 to unlocking only 64 million tokens initially, then linear release. After this news, STRK’s price broke above $2, rising 14%. At that time, STRK’s FDV was still high, but the market clearly digested this positive news—because the unlocking pressure eased.

To reduce FDV’s impact on token prices, project teams need to continuously work on unlocking timing and demand creation. This reflects a shift: markets are moving from focusing on “how many tokens might exist in the future” to “how many tokens will be released soon.”

Capital Flows Are Always Honest, More Than FDV in Explaining the Market

The deeper reason for bullish markets is ample liquidity. Between February 2024, the cumulative net inflow into Bitcoin spot ETFs exceeded $5 billion, directly driving BTC prices higher. By February 21, all US Bitcoin spot ETFs experienced their first net outflow, leading to market correction.

The logic is simple: money flows in, prices go up; money flows out, prices go down. This is more honest than any indicator.

Looking at the ETH ecosystem, due to the hot re-staking sector, large amounts of ETH are being committed to projects like EigenLayer, Blast, etc. This reduces the circulating ETH, which is reflected in relatively strong ETH prices. Protocols like Pendle and others in the LRT sector also rally, with the sector’s hotness directly driven by actual capital.

In contrast, no matter how high a project’s FDV, if real funds are not entering, prices will continue to decline. That’s why monitoring capital flows (ETF data, on-chain fund transfers, exchange inflows/outflows) is more predictive than focusing solely on FDV.

From WLD to OP/ARB: The New Test for FDV Theory

Does FDV still have value? Yes, but only in specific scenarios.

Take Layer 2 giants like Optimism (OP) and Arbitrum (ARB). Previously, OP’s FDV was half of ARB’s, which kept OP’s price roughly twice that of ARB. Although OP’s circulating supply is only about 3 billion tokens less than ARB’s, the difference in FDV explained the price gap.

Currently, data shows that OP’s FDV is $1.37B, while ARB’s is $1.89B. OP’s price is $0.32, ARB’s is $0.19, so OP still maintains a higher unit price. But the reason for this difference is gradually changing—not just the absolute FDV gap, but market expectations for the two projects.

The widespread adoption of OP Stack has laid a foundation for OP’s demand, but with Arbitrum Orbit’s ongoing efforts, Layer 2 competition is far from over. If future trading demand for ARB surpasses that of OP, even if ARB’s FDV remains higher, the market will push ARB’s price higher. At that point, investors who insist on “FDV supremacy” will need to rethink the market logic.

Final Thoughts

Market logic is constantly evolving, and a single indicator cannot guide comprehensive investment decisions. The era of judging cheapness or expensiveness solely by FDV is over. Today’s market pays more attention to: token unlock schedules, real capital flows, market narratives, and potential supply-demand imbalances.

FDV still has reference value, but only when understanding its applicable scenarios. For most traders, instead of obsessing over this number, it’s better to focus on where capital is flowing, where market consensus is forming. Only then can you find real opportunities amid the volatility of the crypto market.